Things to Consider When Buying a Rental Property
July 15, 2014 at 4:32 PM
The idea of owning a rental property continues to be at a priority and objective at the front of the mind of many New Zealanders.
However, increasing house prices has meant that for the majority of us, the idea of buy-to-let is no longer the obvious investment choice.
It was only 10 years ago that you could buy a property for $300k and rent it out for $300 per week, with the monies received comfortably meeting your mortgage repayment requirements.
Today the average house price in Auckland sits well above $500k, meaning the substantially larger weekly financial commitment.
It is quite common today for several family members to combine financial resources and buy rental properties together. For first time rental property investors, this is a logical and viable means to getting a foot into the real estate market. The reduced financial input means less weight on the shoulders too, a problem many over-committed New Zealanders face on a daily basis.
So what do you need to consider when buying a rental property?
Like any investment, buying a rental property comes with no guarantees, but for those who have more faith in bricks and mortar than stocks and shares below are a few tips:
If your knowledge of the area that you’re looking to invest in is minimal, then jump in your car and take a drive. Many Auckland investment properties enthusiasts make poor choices as a result of not knowing their area or the plans for it. By driving around you’ll also establish how accessible the location of your property is and get a sense of the traffic. Also, what condition are surrounding properties in? If you don’t like what you see then there’s a good chance that your tenant won’t either.
Quality of Building
One of the first things you should do if you are quite serious about buying property is have a house inspection carried out by a professional. This will provide you with a pre purchase building report which you'll be able to utilise during any pre purchase property negotiations.
Visit local shops and restaurants by foot and even speak to their owners and ask their opinion of life in the area. You might also know a friend or family member who has or currently lives, visits or work there. Also, be sure to find out if there are any council development plans for the area, what the quality of schools are like, crime statistics and other data.
Before you consider working with a real estate company, find out what prices similar houses in the area have fetched for. Knowing the truth worth of your prospect Auckland rental property will help ensure that you don’t pay more than necessary. You should also find out how much these houses are being rented out for.
Is the property zoned? Can you expand it or convert it to something else? It’s crucial that you know the development limitations of the property.
Rather than imagining yourself living in the property, try to put yourself in the shoes of your target tenants. One of the keys to a successful rental property is long term tenants.
If you’re a first time rental property buyer or own multiple rentals then you might wish to utilize the services of an Auckland rental property management company. There is a lot more involved in managing a rental property than meets the eye. Talk to the team at Wendell Property Management in Auckland to find out more.